Saturday, August 02, 2014

Apple + Beats = Not So Good

A lot of people enjoy a lot of different hobbies. Some like to play tennis. Others go fishing. Some jump out of airplanes. I am, to coin a phrase, a bit more down to earth. One of my main sources of leisure time joy is exposing poseurs. I can't help it. It's a personality flaw that, by some stroke of luck, I've been able to turn into a career.

Being a branding guy, I meet a lot of people who give themselves away by immediately citing Apple as a premium example of "great branding." I listen patiently and then, very carefully, explain to them why Apple is anything but a great brand.

Actually, it's a failing brand.

Make no mistake, Apple is a very successful brand. They make a ton of money. They can boast legions of rabid evangelists lining up at their retail stores to blindly purchase the latest versions of pointless technology. I have no argument with that. Hey, more power to them. But that's not why I feel Apple's best days are behind them.

If you've been reading this blog over the last few years, you know that I've been watching Apple arc from underdog to King of the Hill to Second Generation Brand Headed Into the Meat Grinder (you can read them all by searching this blog for article titles containing the word "Apple"). I've called out Apple for being more of a fashion brand than a legitimate brand, much more akin to Abercrombie & Fitch than Federal Express. And now, with their acquisition of Beats, it seems they've sealed that fate.

Here's why:

1. Fashion brands get hot and die cold. What was once hip, slick and rebellious is now mainstream. When your grandmother has an iPhone, it just isn't as cool any more. You start looking for the Next Big Thing.

2. There was a time where Apple users sniffed at PC users as Neanderthals handcuffed to Microsoft. That was when Microsoft was the only other game in town. Today, thanks to the proliferation of mobile devices, there are plenty of other platforms with lots more to offer than Apple. Android, in particular, comes to mind, but there are lots more systems, with lots more apps from lots more brands. The time has come where Apple users want to switch out but feel trapped by having invested so much into Apple's fortressed, domineering domain.

3. If you add points #1 and #2, you get to point #3, where users find themselves waking from the dream and asking why they're paying premium prices for Apple devices and systems that may be as good, but not better than, its competitors. That bell you hear is the death knell of fashion brands as the public realizes its overpaying for under-delivery.

4. Apple has migrated from a productivity platform to an entertainment platform. This is serious. Back when Apple took its productivity seriously, we'd hear all kinds of technical achievements over competitive platforms. Macs would smack down IBM mainframes and leave PC-based systems in the dust with an elegant ease. You don't hear those stories any more, because Apple's focus has, like so much of America, been dumbed down to cater to the self-interest of the average Joe, whose primary needs revolve around music, videos, social media and mostly other non-productive tasks. When it comes to pandering to the public's narcissism, Apple is tough to beat.

5. Apple has become a stagnant brand. As I've written here previously, there are Three Generations of Wealth: The first one earns it; the second one spends it; the third one loses it. Now that Steve Jobs is essentially a long-forgotten ghost, Apple is a second generation brand that has abandoned its fundamental vision. Its management mistakes driving revenue at any cost with the much more complex task of driving revenue while maintaining the brand integrity and leadership that brought it to prominence. Tim Cook et al are simply grasping at the lowest hanging fruit in order to generate the easiest money they can find. That's what Second Generation brands do. It's also what drives them into the ground. It's why once-great brands like Maytag (which no longer builds its own washing machines, but essentially licenses its brand name on inferior, outsourced products) has swan dived from its previous premium perch into the cesspool of also-rans.

Now we find that Apple, for the first time, is also violating one of its long-held tenets: Retaining the Beats brand identity. Whereas there was a time when every product (built or bought) become an Apple brand, this is no longer the case -- and it's very telling: By retaining the Beats name, Apple admits its own brand is not as strong as, or quite possibly weaker than, Beats. Which means that the cracks in the Apple armor are beginning to show.

But hey, don't take my word for it. All you fanboys can keep believing, if you like. There are still millions of Beatles fans who don't want to accept John Lennon's announcement of the band's demise. Decades later, they still can't believe it. But believe it you must:

Your assumption that Apple is on the death knell of fashion is based upon the wrong set of numbers/details. If you buy an APPL product and you believe that your overpaying, Check the depreciation of an iPhone/imac against any PC/android products and then tell me apple products are too expensive

This website is a branding failure. You know how I can tell when a brand 'expert' gives himself away: when he claims a successful brand is not a great brand. You meant to say profitable. The other big give away is any link to any evidence Cook is driving revenue at any cost (or any other assertion made here). Just because you italicize it, doesn't make it a fact.

The question for you is: what would it take for you to admit Apple is still a great brand? Continued high customer satisfaction metrics? Continued record-breaking sales? More productivity software??really?? Beats' full, successful integration into the Apple ecosystem despite being managed as a separate brand?

I'm pretty sure in this hyper-connected world, people know exactly what they're paying for and why they're paying for it. The fact that you think large swaths of Apple users are just delirious fanboys shows your true disdain for the customer, brand failure numero uno.

Point #2: do some math, branding guy: how much lock-in is there, exactly, for either an iOS person or Android person?

- music is non-DRM'd and can play on either.- most people rent movies, not buy them, so it's a zero-sum there- most apps are available on both platforms and - cost very little or are FREE - users depend on very few apps, so replacement even for paid apps is minimal, especially when compared to the price of a device or a contract

I would venture that unless you're heavily invested in movies from iTunes, which you can still use existing devices to play them from even if your newest phone is an Android device, the total cost to switch ecosystems ASIDE FROM the new device is likely significantly less than $100.

If any part of your article is true or based in objective reality it is undeniable proof that the moon IS made of cheese. Well, done sir! Just wait for the NASA fanboys on this one, those ignorant SOBs.

I’m going to need to correct you on one point, and one point only, for sake of brevity. Maytag didn’t decline because they outsourced their brand, they declined because the brands they bought (Jenn-Air, Hardwick Stove, Admiral, Magic chef etc) were not in alignment with their brand strategy. When you’re selling lower-cost products with the higher primary and support costs of a premium brand, you get inconsistencies in direction resulting in vastly lower profits (1% in the 1990’s as compared with 8-12% in the 70s and 80s.Time will tell whether the Beats acquisition will be profitable/useful, but at a minimum the brand aligns with their overall strategy (premium product, highly marketable, low market share, high margin).For a brand guy, you don’t really seem to know your brands, and you certainly don’t understand enterprise strategy. Italicising words doesn’t make them true, and presenting yourself as a ‘brand guy’ with a publicly facing website that looks as it does is a little incongruous to say the least.

1. As of last Christmas, nearly a third of teens surveyed wanted an iPhone for Xmas vs. only 12% who wanted a Samsung phone. That's 9 month old data, but as the iPhone 6 launch approaches, interest appears to be on the rise, not declining. http://www.kvue.com/story/news/local/2014/08/06/police-respond-to-possible-north-austin-bank-robbery/13672533/

2. There ARE more mobile platforms than ever, but only Android has gotten any traction. While we're talking about Android and branding problems, most Android phones have FIVE or more associated with them: Google, Android, Chrome, plus the OEM brands (Samsung/Galaxy/TouchWiz, for example). Anyways, iOS continues to grow, so...

3. The Apple Tax is a myth; it's been well-established that *comparably equipped* Windows computers are approximately the same price as a Mac. On the mobile front, the same story is true. Factor in depreciation, and Apple users typically come out on top financially. http://ericrshelton.com/2011/12/04/the-myth-of-the-apple-tax/

4. Apple has continued to emphasize productivity. That's why we now have a cross-platform, web-enabled version of iWork along with native iWork apps for OS X and iOS.

5. Apple is far from stagnant. Consistent, perhaps, but not stagnant. Look at the new "Stickers" MacBook ad as a great example of that; it's the first time in recent memory that they've shown their products in less than pristine condition. That demonstrates that they're capable of change, and responding to an increased desire for personalization, even as their laptops have started to become ubiquitous. As for Beats, they're capitalizing on a strong brand that they acquired. Headphones are a commodity, and a large portion of Beats' value prop was the strong brand that commands premium pricing in the market. To abandon that value after spending $3B on the company would be foolhardy.